Any info about Iomega (IOM)? Message Board

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Non-Tech : Any info about Iomega (IOM)?

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To: Kobeisthelakers who wrote (30371)	9/18/1997 1:42:00 PM
From: Jon Tara	of 58324

Jerry, think about what happens when call options expire. Normally, when you have a call option and want to dispose of it, you have two choices - you can either sell it or exercise it. Most option players prefer to sell it. At expiration, though, all in-the-money options HAVE to be (eventually) exercised. The option specialists and arbitrageurs assist in closing-out these positions by buying options that are offered by the public (often at a discount to intrinsic value on the last day). They then exercise the option, and (usually) immediately sell the stock. If there is a high open interest in the calls vs. the puts, there could be a lot of arbitrage-related selling, which would tend to push the price down. It will tend to push it down to the nearest strike price. Also helping in this is the fact that the profit potential of at-the-money options approaches infinity the closer you get to expiration. An efficient market is not going to permit infinate profits, and so it gets more and more difficult for the stock to pull away from the nearest strike price.

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